Positioning Nigerian Banks to Compete Successfully in Global
Financial Markets-The Human Capital Angle
E. Chuke Nwude, PhD
Department of Banking and Finance, Faculty of Business Administration
University of Nigeria Nsukka, Enugu Campus. chukwunekenwude@yahoo.com 08034738615
Abstract
Human Capital is the key asset that helps the organisation to achieve its overall objectives. Up to the year 2011,
banking sector is currently in short supply of people with skill and required competence. One of the issues that
gave rise to Human Capital Challenge in the banking industry is the pace of post-consolidation expansion (local
and offshore), insufficient focus on professional banking qualification, difficulty in attracting and retaining the
right people, and acute shortage / intense competition for skilled personnel. Another angle of the reasons being
that of inadequate training interventions; frequent movement of officers due to remuneration; and emphasis on
marketing skills at the expense of managerial and leadership skills. Businesses with value-adding, superior
propositions tend to become profitable ventures. From corporate perspective or Bankerâ&#x20AC;&#x2122;s viewpoint, in as much as
it looks to identify and implement employee cost reduction initiatives, at the same time, it also finds ways of
holding on to and developing its top talent. From Personal Perspective, an articulate person prepares himself to
have control over his career and earn more in the shrinking global village. Individuals position themselves for
global competitiveness to gain increased job mobility and leverage against unstable political environment by
acquiring internationally accredited qualifications. This can be achieved by quality education from world leading
institutions, joining organizations that offer international exposure, and acquisition of internationally accredited
professional certification. Companies that want to keep pace with the growth anticipated in the years to come must
adjust their practices to effectively attract and retain new generation of human capital; create inclusive
organisations where all employees feel valued. To enhance competitiveness the banking industry need leaders who
understand both local business context and global strategy so that they can think global and act local. Forwardthinking organizations use innovative talent-management approaches to gain a competitive advantage, which help
them ride out of downturn and create a strong platform for recovery and growth.
1.0 Introduction
Since 2005, nothing has excited us more, as a nation, than the vision to become one of the twenty most developed
economies in the world by the year 2020. Anyone familiar with the way the world economy is structured at the
moment cannot but agree that the financial services sector is very critical to the realisation of that aspiration. One
major outcome of the consolidation exercise was the leverage it gave some of our financial institutions, especially
banks, to venture to play active roles in global financial markets. On account of these efforts, some Nigerian banks
have established presence in a number of countries in West Africa, while others now have subsidiaries in such
countries like the China, US and the UK. What must be understood is that playing an active role in global financial
markets goes beyond establishing physical presence. It must cover a whole range of issues around capacity,
service, and governance. Given this background, therefore, positioning Nigerian banks to compete successfully in
the global financial markets is both important and appropriate.
The World Bank(2009) estimates that the global economy would shrink by 1.3 per cent in 2009. True to that
statement, global activities retreated everywhere, in addition to unprecedented collapse in world trade, commodity
prices fell sharply. As at September 2009, the world was gradually coming out of an unprecedented financial crisis
in history. The depth and breadth of the global financial crisis posed some challenges for the African economies,
albeit, Nigerian economy. With global activities retreating everywhere, the demand for Nigeriaâ&#x20AC;&#x2122;s exports fell
sharply and remittance flows into the country significantly reduced. On the financial side, even though Nigerian
banks avoided excessive exposure to toxic assets, in contrast to their counterparts in advanced economies, private
capital flows retreated with both portfolio inflows and foreign direct investment falling rapidly. Fortunately, the
country had built up foreign exchange reserves which had helped cushion the effects of the shock to date.
New products, new markets and new regulatory systems have radically altered the environment in which banks
operate, opening new profit opportunities but also creating risks. Among the most important of these changes, is

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the worldwide move towards liberalization and deregulation of the banking industry. Practically everywhere,
domestic banks lost the protection of strict regulatory barriers to entry, becoming vulnerable to strong competitive
pressures both from other domestic financial institutions and foreign banks. The issue of competitiveness in the
banking industry has received increased attention in the recent past, due mainly to the process of globalization,
liberalization and consolidation in the financial services industry, and developments in information and
communication technology, which has characterised many economies around the world.
From the foregoing it can be rightly observed that we live and work in a period of rapid, all-encompassing change
that is driven by a number of forces. The forces pushing and pulling the world economies to what is commonly
referred to as the New Economy include: 1.Technological change, which include computerization, miniaturization
and advances in information technology; 2. Globalization and increase in the inter-relatedness of the world
economies, which portends greater direct and indirect competition for domestic operations, as well as expanded
opportunities for learning from competitors and organizational change; 3. New management practices like
economic value added, total quality management and forms of work organization like high performance work; 4.
New business strategies, such as pursuing ‘niche’ markets and smaller more flexible production runs; 5. New
financial institutions and mechanisms like universal banking, growing ownership concentration in large
institutional investors and innovations in debt financing.
Consequently, there is now a consensus that human capital is central to the attainment of competitive edge at all
levels. For a firm to make a difference in its industry, it must parade people with the right competencies and
attitudes in its employment. This is even more so in the service industry, where people make all the difference in
the performance of the firm. Human Capital is the key asset that helps the organisation to achieve its overall
objectives and create superior value. Businesses with value-adding, superior propositions tend to become
profitable ventures. Similarly, for a nation to take its rightful place in the world, it must invest in the management
and the development of its human capital.
Human Capital is a catch-all term used to describe the practical knowledge, acquired skills and learned abilities of
an individual that makes him or her potentially productive and thus equips him or her to earn an income in
exchange for labour. At the level of the individual, human capital is used to describe that unique value(knowledge,
skills, competencies and attitude) which people bring to the production process as human beings. At the level of a
firm, human capital is often used to describe the aggregate stock of the potential of the people of the firm for lifelong self development, knowledge accumulation and technological advancement that is deployed to drive
institutional development. At the level of a nation human capital is the aggregate stock of the potential of the
people of a country for lifelong self-long self-development, knowledge accumulation and technological
advancement that is deployed to drive national development.
On the other hand, global competitiveness is often used as a concept to describe the ability of a nation to produce
goods and services that meet the test of international competition, while its citizen enjoy a standard of living that is
both rising and sustainable. At the individual firm or sector level, global competitiveness is a concept used to
describe the sustained ability of a firm or a sector to profitably gain or maintain market share in the domestic or
export market. Given the lowering of trade barriers between nations, firms are increasingly forced to raise the
quality of their products and/or services, as global competition for the consumer’s money severely punishes
inefficiencies. The four factors of competitiveness often considered are Economic Performance; Business
Efficiency; Government Efficiency; and Infrastructure.
2.0 Literature Review
Atkinson and Court(1998) state that the new economy order stresses speed, performance, flexibility, collaboration,
widespread enterprise restructuring, greater job instability and insecurity and increased reliance on non-standard
forms of work, which include contingent work, outsourcing and temporary employment firms; flattened
management structures and truncated career ladders; weakened unions and dated industrial relations systems; the
demise of the “social contract” under which workers traditionally received career advancement and training
opportunities, earnings growth, employee benefits and lifetime security in exchange for their abiding commitment
to a single employer; and increased labour market segmentation and widening earnings and inequality; and
demographic changes. Peter Drucker (2001) identified the major demographic changes the world had witnessed in
the last two decades to include: the noticeable improvement in life expectancy found in all parts of the world, the
shrinking of the younger population (the aging of the baby-boom generation), the emergence of the knowledge
society, the knowledge work and the knowledge worker. These changes have far-reaching implications for work
and workers, as well as for the system that prepares people for work and careers. A few of the implications are:
First, there is a marked premium on education and skills in the labour market, as well as rising demand for broad

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based workplace competencies. Current skill gaps are likely to persist due to the speed of economic change and
the need for continual skill upgrading. Second, there is increased job â&#x20AC;&#x153;churningâ&#x20AC;?, skill obsolescence and labour
market volatility, all arising from the dynamics of the new economy. This dynamism is the result of the continual
creation of new technologies and jobs and the displacement of old technologies, industries and jobs. Third,
individuals are responsible for arranging and financing their own skill development with the government and
employers as partners. This is the result of several trends. Career ladders within firms have been reduced due to
the restructuring of work, outsourcing and other business practices. At the same time, workers are increasingly
moving among numerous employers over time rather than pursuing a long-term career with a single employer.
Although employers are investing in workers, they are most likely under-investing in low-skilled workers.
Globalization has ensured that economies are no longer isolated. With trade liberalization; countries have further
opened up their economies to further greater external influence. To this extent, there is a heavy flow of capital
across economies such that whatever affects an economy domestically has a great chance of affecting a lot of other
economies as we have recently seen with the current global economic crises that originated from the US and
spread rapidly across the globe. Information revolution has accelerated the rise of a single global economy with
information becoming accessible everywhere and economies becoming more easily integrated. Over the last few
years increased level of information flow has pushed the world into a more open and interconnected global
economy. This has shown the openness of the global economy and the adequacy (or) inadequacy of regulation in
the financial services industry. Funds are flowing across borders at unprecedented level and for Nigeria, this could
be seen in the rise in FDI to the tune of USD13.95 billion an increase of 564% over USD 2.1 billion recorded in
2004.
3.0 Issues and Challenges
Following and agreeing with the arguments of Alo(2009) and Banjo(2009), to appreciate the magnitude of the
limitations of the stock of human capital available to Nigerian financial institutions we take a look at the issues
and challenges of human capital development in Nigeria. This is needful because any effort to position the human
capital stock of our financial institutions in Nigeria for global competitiveness must take account of the issues and
challenges facing human capital development in Nigeria. These include:
Poor or inadequate Investment on Health and Education: Over the years, the percentage of our national
budgets allotted to education and health had been below the minimum standards set by relevant international
agencies for member countries. Beyond budgetary allocations, we are yet to get the management of these two vital
sectors right in Nigeria, with incessant strikes by the leading trade unions in those sectors. This can only breed
unprofessionalism and incapacity.
Poor or Inadequate Strategic Planning for our Educational System: This has manifested in different ways,
including poor response to the needs of the labour market, poor manpower planning by both public and private
sector employers, with attendant lack of information on their current and future skill needs in a form that could be
transformed into strategic planning by the education and training institutions, inadequate practical incentives for
public educational institutions to change their current orientation.
Poor Infrastructure and Weak Governance Practices in many of the educational training institutions: This
is often manifested at various level of the educational system in the form of mismanagement of resources,
corruption, poor remuneration, out-dated performance management system.
Poor or Weak Linkage between the town and the gown: The gap between what obtains in practice or industry
and what are taught in the schools results into very limited cross fertilization of ideas between the educational
institutions and the communities they are supposed to serve. Support by the private sector for educational
institutions has tended to focus on the provision of lecture halls, student hostels, computers, with little attention
paid to curriculum development, administrative reforms, research support and building the capacity of the faculty.
This has resulted to in-breeding and the emergence of an ostrich mentality.
Massive Brain Drain of academic staff: It is no more news that academic staff of Nigerian descent emigrate
from Nigeria each year in search of better conditions. The poor conditions of service and poor reward system have
left our tertiary institutions of learning with acute shortage of qualified academic staff.
Inadequate supply of competent manpower in the banking sector: The banking sector is currently facing acute
shortage of people with skill and required competence. The reasons for this include inadequate training
interventions, frequent movement of officers due to remuneration, emphasis on marketing skills at the expense of
managerial and leadership skills, pace of post-consolidation expansion (local and offshore), insufficient focus on

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professional banking qualification, difficulty in attracting and retaining the right people, intense competition for
skilled personnel.
4.0 Positioning Human Capital for Competition in Global Financial Markets
No where are the changes defining the new economy more evident than in financial markets. They are the arena
where speed of innovation, new and exotic products, and mega transactions, made possible by the latest
developments in information technologies, define the rules of competition. To play successfully in such markets,
therefore, Nigeria firms must build their capacities in all areas. While it is relatively easy to acquire the latest
technologies, it is far more difficult to source and develop the human capital required to compete successfully in
this new economy in the right number and with the speed demanded by the dynamism of those markets. Given the
context described above, the task of positioning our human capital for global competition must be seen as a
national one deserving urgent attention. It is a task that must be tackled at various levels and one which calls for
effective partnership between the public and the private sectors of the Nigerian economy. Some of the steps we
need to take urgently include:
1. Increase Funding: We must design a workforce investment system that is demand driven. Public and Private
Partnership must be encouraged in the provision of educational services. More budgetary allocation must be
provided urgently for education and health.
2. Adoption of Strategic Planning: More accurate forecasts and projections of supply and demand of specific
skills in the different sectors of the Nigerian economy should be made by experts. Better use of statistics in
educational planning should be incorporated in the mechanisms of the National planning Commission.
3. Upgrade Governance Practices in our educational Institutions: There should be managerial skills
development programmes for principal officers of our tertiary institutions, total overhaul of Human Resource (HR)
Management practices, mandatory train-the-trainer courses for all academic staff, greater emphasis on
transparency and accountability, improved remuneration for staff of educational institutions.
4. Improved Linkages of Educational Institutions with the business world: It is very important to re-orientate
the existing sabbatical leave arrangement to make for the acquisition of practical experience by academic staff.
Top business executives should be sponsored to spend time on the faculty of higher institutions to impart practical
knowledge to academic community and gain theoretical framework. Curriculum development and practical
research in schools must be restructured to provide for the needs of the industry and supported as a matter of
urgency. There is need for Faculty exchange programmes across Africa and involving African academics in the
Diaspora. A total re-working of the current Student Work Experience Programmes is desirable.
5. Actively promote life-long learning, re-skilling and up-grading of the Workforce: A re-orientation of the
workforce to realize that they have primary responsibility for their own growth and development is necessary.
Enabling environment should be created by governments and employers to encourage continuous learning by
workers. There should be appropriate incentives for multi-skilling and skill up-grades.
6. Incorporate new ways of learning, including learning technologies: It is hereby advocated that financial
institutions should team up and develop facilities together and share infrastructure for learning in order to update
human capital for the financial services sector. They should team up and develop standard curricula for different
skill sets required in the sector and back each up with integrated certification schemes for the different specialist
areas in the sector.
7. Adoption of best practices in human resource management: Adoption of best practices in human resource
management by players in the Nigerian financial services sector, especially in the areas of recruitment, selection
and placement; Performance Management; training and development is a sine qua non.
8. Acquisition of Internationally Acceptable Qualifications: An individual could position for global
competition because of any of the following reasons: to control his career and earn more, to prepare for a career in
the shrinking global village, to gain increased mobility with internationally accredited qualifications and, to
leverage against unstable political environment while keeping many options open. This position can be secured
through acquisition of quality education from leading institutions in chosen areas of specialization, joining
organizations that offer international exposure, and obtaining internationally accredited professional certification.
9. Cooperation among firms in the use of common facilities: Cooperation should be the driver of business and
companies that want to be progressive should begin to do just that. Companies can share transactional services
platform, share manufacturing and distribution facilities, Airtime network alliances.

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10. Adoption of revised Approach: During recruitment, selection and placement, differentiate your organisation
from others and match aspirations of people consistently with the organisation’s goals. Companies need to
differentiate their organisations from others, reinforce employee belonging through personal recognition, focus on
the critical workforce segment within the organisation, and grow own labour pipeline through career mapping and
structured career development interventions.
11. Retention of Diverse Talents: To remain competitive in the face of changing demographics and a narrowing
talent pool, rapid globalisation and unparalleled demand for constant and rapid change, there is need to develop
diversified organisation and effectively managing it. Managing effectively a diverse organisation will out-think
and outperform a homogeneous organisation every single time and this is imperative for long term success.
Companies that want to drive business for the future must attract and retain diverse talent. Many talented
individuals leave companies not because of pay related issue but rather because of feeling marginalised as a result
of the style of leadership they encounter, which is typically characterised by an inability to effectively manage
diversity and this trend cannot be solved by simply offering higher salaries. Brand innovation comes with
diversity. Companies cannot expect new ideas to emerge if everyone thinks the same. Companies need to generate
commitment which will take care of attraction and retention of skilled talent.
12. Purposeful leadership: There is need for leaders who understand both local business context and global
strategy, which will drive for organic growth in emerging markets, cost effectiveness/efficiency drive to enhance
competitiveness. The rankings from the World Bank Group Doing Business 2010 report, covering the period June
2008 through May 2009 shows the ease of doing business Index of these countries as follows: Singapore – 1,
Mauritius – 17 (1), Ghana – 92 (7), Kenya – 95 (8), South Africa – 34 (2), Botswana – 45 (3), Rwanda – 67 (5),
Ethiopia – 107 (9), Uganda – 112 (11), Nigeria - 125 (13). Singapore policy makers have rightly identified that
nurturing human resource is the key to attract new investment as well as to sustain its position as the most
resourceful hub to conduct business. Singapore has demonstrated its commitment to revitalize its policies and
resources to remain the most resourceful business hub for start-up companies as well as long established
companies of all sizes. Harnessing human capital through purposeful leadership is imperative.
4.1 Benefits of Positioning Human Capital in Nigerian banks
Customers Benefits: Customers enjoy the benefits of strong competition in a deregulated banking system.
Competition brings about significant savings for customers and with declining margins it helps to bring about
lower interest rates. It also results in a much wider choice of providers of products and services for customers.
Bank Benefits: With enhanced human resource base in the banking industry, professionalism will be enthroned
with its obvious positive effects, fraudulent practices will minimize especially the ones with insider abuse of oath
of secrecy. There will be transparency in bank charges to customers, unhealthy competition will stop when ethics
occupies the mind of the bankers. As capacity is adequately addressed, specialization in different areas of bank
commences. Bank operators will now have the gut to regulate the regulators as they now operate the banks with
clean hands. Unhealthy rivalry among the banks will stop and cohesive forces take the centre stage. The concept of
ombudsman has to be there to check bankers by bankers.
Benefits to the Economy: It is a general belief in the banking circle that corrupt money was imported into the
bank from corrupt public sector by corrupt public authorities and this transported corruption into the bank. With
ethical revolution of human capital in banking no such money can come in without commensurate penalty. This
can engender sanity into the financial management in the public sector and the economy will benefit immensely
from good management of public funds.
5.0 Conclusion
In this paper, attempt has been made to show that to compete effectively in global financial markets, Nigeria needs
to adopt a holistic approach for its national human capital development agenda. It is a task that calls for
constructive partnership between the public and the private sectors, and between the town and the gown. High
quality human capital cannot thrive unless we create the right enabling environment. Some key ingredients
necessary for building competitive economies and stronger countries include: open trade; education and
innovation; the rule of law, property rights, effective governance; modern infrastructure, an open and deregulated
economy. All these ingredients are relevant to Nigeria and other developing nations, and they have universal
application. Human Capital flight (symptomatic of an environment that is not conducive) is still a major issue. We
may be losing our competitive base as long as it continues.
Notwithstanding that Nigeria implemented banking sector reforms in 2004-2006 and 2009-2011, through which
some strong and well-capitalised banks emerged and helped to improve the competitiveness of Nigerian banks,

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managing our foreign reserves and containing inflation is still very important. It is also very obligatory on the
monetary authorities to keep an eye on the health of the banking system and be prepared to act decisively to
mitigate any sign of distress.
To respond to the challenges of the times meant that the monetary authorities must pursue policies and take
measures that will promote the health and stability of the banking system. Such policies must encompass measures
that would enhance the payment system, ensure adequate liquidity and channel credit to the productive sectors.
Policy makers need to accept that nurturing our human resource is the key to attracting new investment as well as
becoming the most resourceful hub to conduct business in Africa. The financial services sector, in particular, must
invest in developing shared infrastructure for learning; promote the development of standard curricula and
certification schemes across the broad range of skills and competencies in the sector. Unless Nigeria begins to take
active steps to plan and implement these programmes, the country shall continue to play at the margin of global
financial markets. In Nigeria, we have our Competitive Advantage in our numerical strength, passionate and
friendly people, highly educated talent base, and countless natural endowments that need to be harnessed. This is
the case for positioning human capital for global competitiveness.
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